Controlling a computer-aided process

ABSTRACT

System and method regarding controlling a computer system and computing directed to constant dollar instruments. The method can include providing a computer system including a computer connected to an input device and to an output device; operating a computer program, at the computer, that facilitates: receiving, at the input means, input information; determining, from the input information, an infill index; receiving, at the input device, input financial product information; processing, at the computer, the input financial product information with the infill index to produce data corresponding to a constant dollar financial instrument; and outputting the data at the output device.

I. PRIORITY

The present patent application is a continuation-in-part of U.S. patentapplication titled “COMPUTER-AIDED PROCESS OF FUNDING, INCLUDING APRIVATE DOLLAR INSTRUMENT,” Ser. No. 10/957,399, filed by the sameinventors on Oct. 1, 2004, and “COMPUTER-AIDED PROCESS OF FUNDING,INCLUDING A PRIVATE DOLLAR INSTRUMENT,” Ser. No. 11/074,121 filed by thesame inventors on Mar. 7, 2005, and “A COMPUTER-AIDED SYSTEM FORINFLATION-IMMUNIZED EXCHANGE RATES,” Ser. No. 60/775,285, filed on Feb.21, 2006, and naming as inventor Wayne Perg and Anthony Herbst, all saidapplications hereby incorporated by reference.

II. TECHNICAL FIELD

The technical field is computers, computer-aided methods, computercontrol means, and data processing systems, as illustrated moreparticularly herein. Exemplary embodiments include, depending on theimplementation, apparatus, a method for funding, a method for pricing, amethod for servicing, a method for risk management, a method foracquiring and selling, and corresponding products produced thereby, aswell as data structures, computer-readable media tangibly embodyingprogram instructions, computer-generated documentation, manufactures,and necessary intermediates of the foregoing.

III. BRIEF DESCRIPTION OF THE DRAWINGS

FIG. 1 is an illustration of an embodiment.

FIG. 1A is an illustration of an embodiment;

FIG. 1B is an illustration of an embodiment;

FIG. 2 is an illustration of a flow chart for an embodiment.

FIG. 2A is an illustration of a flow chart for an embodiment.

FIG. 2B is an illustration of a flow chart for an embodiment.

FIG. 2C is an illustration of a flow chart for an embodiment.

FIG. 2D is an illustration of a flow chart for an embodiment.

FIG. 2E is an illustration of a flow chart for an embodiment.

FIG. 3 is an illustration of a flow chart for an embodiment.

FIG. 3A is an illustration of a flow chart for an embodiment.

FIG. 4 is an illustration of an embodiment.

FIG. 5 is an illustration of an embodiment.

FIG. 5A is an illustration of an embodiment.

FIG. 6 is an illustration of a flow chart for an embodiment.

IV. MODES

As used herein, the term “computer” generally refers to hardware orhardware in combination with one or more program(s), such as can beimplemented in software. Computer aspects can be implemented on generalpurpose computers or specialized devices, and can operate electrically,optically, or in any other fashion. A computer as used herein can beviewed as at least one computer having all functionality or as multiplecomputers with functionality separated to collectively cooperate tobring about the functionality. Logic flow can represent signalprocessing, such as digital data processing, communication, or asevident from the context hereinafter. Logic flow can be implemented indiscrete circuits. Computer-readable media, as used herein can compriseat least one of a RAM, a ROM, A disk, an ASIC, and a PROM. Industrialapplicability/technical affect is clear from the description, and isalso stated below, e.g., as regards controlling a computer system, orpart thereof, so as to affect efficiency management of computerresources, rate and manner of data transfer (e.g., by way ofstandardizing data by template input or computers in the system adaptedto cooperate such as by “knowing” the format, order, and/or significanceto attribute to data being transmitted/received.

As used herein, “embodiment” should not be construed as the sole manner,but rather as an illustrative teaching, much as though teachingmathematical addition does not require setting out every numericalcombination to convey the concept extending beyond the teachingexamples.

By way of the following prophetic teaching, consider that there isprovided computer support, as in a data processing system, forimplementing funding, including a private constant-dollar instrument.Said computer support for this computer-aided method of funding may beimplemented by one computer system or it may be implemented by multiplecomputers that may be connected or networked together in an ongoingmanner, intermittently, or one time. If implemented by more than onecomputer, the system may include at least one from a group including,but not limited to: a financial intermediary computer; a depositoryinstitution computer; a commercial bank computer; a credit unioncomputer; an insurance company computer; a pension fund computer; afinance company computer; a leasing company computer; an investmentcompany computer; a mutual fund computer; a real estate investment trustcomputer; a special purpose entity computer; a real estate mortgageinvestment conduit computer; a trust computer; a limited liabilitycompany computer; a partnership computer; a corporation computer; aservicing computer; a reporting computer; a broker computer; a tradingcomputer; a clearing computer; a rating agency computer; an investmentbanker computer; a mortgage banker computer; a user of funds computer; asupplier of funds computer; and an other computer.

A servicing computer may be any computer that is servicing any financialinstrument in any of the plurality of tiers of instruments. A brokercomputer may be the computer of a mortgage broker, a securities broker,a broker/dealer, and/or a broker's broker. Other computers that might beconnected at some time and thus participate in the computer-aided methodof funding include, but are not limited to: a business computer, anonfinancial corporation computer, a financial institution computer, aconsumer computer, a household computer, a student computer, aneducational institution computer, a religious institution computer, acharitable institution computer, an academic computer, a researchercomputer, a foreign investment-creating computer, a foreign servicingcomputer, a foreign investment banker computer, a foreign mortgagebanker computer, a foreign trading computer, a foreign broker computer,a foreign rating agency computer, a foreign reporting computer, aforeign investment manager computer, a foreign investment advisorcomputer, a foreign bank computer, a foreign insurance computer, aforeign pension fund computer, a foreign clearing computer, a foreigninvestor computer, a foreign accounting computer, a foreign issuercomputer, a foreign financing company computer, a foreign leasingcompany computer, a foreign business computer, a foreign nonfinancialcorporation computer, a foreign financial institution computer, aforeign business computer, a foreign consumer computer, a foreignhousehold computer, a foreign student computer, a foreign educationalinstitution computer, a foreign religious institution computer, aforeign charitable institution computer, a foreign academic computer,and/or a foreign researcher computer.

If the computer-aided method of funding does involve more than onecomputer, the computers that may be part of the computer system mayconnect into the system on a continuing basis, intermittently, or on aone-time basis. Any computer that may be involved, regardless of whetherone or more is involved, may be in any form or combination, including,but not limited to: a mainframe computer and terminal(s) configuration,a client/server computer configuration, a configuration comprised of apersonal computer, a desk-top computer, a lap-top computer, a pocketcomputer, a palm computer, a personal digital assistant, a digital cellphone or other portable device, but other ways of thinking, embodimentscan extend to comprising a Wi-Fi node, an embedded processor, a car orother vehicle computer, a light-wave computer, a biological or hybridcomputer, a quantum computer, etc.

If more than one computer is involved, the computers may be connected,or not connected, in any pattern. The connections need not becontinuously maintained; they may be intermittent, one-time or ongoing.One or more of these connections may involve the use of the Internet, anintranet, e-mail, instant messaging, text messaging, voice mail, a localarea network (LAN), a wide area network (WAN), a twisted pair of copperwires, a coaxial cable, a cellular network, Wi-Fi, wide area Wi-Fi, aWi-Fi network, a light-wave transmission, infrared, and/or a wirelessconnection. One of more of the connections may involve one-waycommunication only. One or more may involve two-way communication. Realtime communications are another possibility.

More than one of any variety of computer may be involved in thecomputer-aided method of funding. For example, there may be more thanone user of funds computer, more than one supplier of funds computer,more than one broker computer, etc.

Private constant-dollar financial instruments can be financinginstruments issued by (i.e., they are liabilities of or interests in)funds users who are subject to default risk, including (but not limitedto): individuals, households, for-profit businesses, corporations,partnerships, limited partnerships, sole proprietorships, financialintermediaries, depository institutions, banks, credit unions, thrifts,savings and loans, savings banks, insurance companies, investmentcompanies, real estate investment trusts (REITS), limited-liabilitycompanies, not-for-profit businesses, nongovernmental organizations,trusts, real estate mortgage investment conduits (REMICS), otherpass-through entities, municipal governments (state and localgovernments), agencies of municipal governments, school districts, waterdistricts, transportation districts, other special purpose districts,and federally sponsored enterprises (e.g., Federal National MortgageAssociation, Federal Home Loan Mortgage Corporation, etc.). The issuersof private constant-dollar financial instruments may be domiciled in theU.S. or in other countries. The private constant-dollar instruments maybe denominated in U.S. dollars or any other currency. Note thatembodiments herein can also be applied to commodities, such as oil.

Unlike the federal government, the issuers of private constant-dollarfinancial instruments do not have the power to print money. Therefore,unlike securities issued by the national or federal government, privateconstant-dollar financial instruments are subject to default risk andthis default risk may be reduced by matching the payments promised bythe instruments to the expected future revenues of the issuer. The fixedreal (purchasing power) payments of the private constant-dollarfinancial instruments can be tailored to produce a reasonable, or eventhe best possible, match between promised real payment amounts and theexpected future real revenues of the issuer, thus reducing the defaultrisk relative to alternative instruments which do not have fixed realpayments and cannot, therefore, be tailored to produce a reasonable, oreven the best possible, match between promised payments and expectedfuture real revenues.

Note that the use of the U.S. government is illustrative, as the conceptapplies equally well to other governments that have the power to printmoney.

Constant-dollar financial instruments are financial instruments whoseterms (e.g., payment amounts, rate of return or interest rate, scheduleof remaining principal balances, etc.) can be specified in units ofconstant purchasing power, such as dollars that have been adjusted usingan index such as a price index (for example, one of the variations ofthe Consumer Price Index) so as to maintain constant purchasing power.However, the term “constant-dollar financial instrument” can apply tofinancial instruments whose terms are specified in units that are heldconstant in purchasing power and/or are adjusted through the applicationof some suitable index.

The units that are held constant in purchasing power and/or are adjustedby an index may be any currency (not just dollars) and they may be heldconstant and/or adjusted by any desired price index or other economicindex. Said currency may be any national currency (e.g., U.S. dollars,Canadian dollars, Australian dollars, Mexican pesos, British pounds,Swiss francs, euros, yen, rubles, zlotys, Danish kroner, etc.) or anyother variety of currency including private and/or local currencies.Possible varieties of said price or other index may include, but are notlimited to: 1) a price index for the respective national economy as awhole (e.g., in the U.S., the consumer price index for all urbanconsumers, the gross domestic product deflator, etc.); 2) a price indexfor some component of the respective national economy (e.g., a healthcare price index, a housing price index, a commodity price index, anindex made up of a single price such as the price of gold or the priceof oil, an export price index, an import price index, a traded goodsindex, a wholesale price index, a goods price index, an electronic goodsprice index, a services price index, the consumer price index for aspecified urban area, the consumer price index for a specified region,etc.); 3) an economic index for the respective national economy as awhole (e.g., in the U.S., the nominal gross domestic product, the realgross domestic product, productivity, nominal wages, real wages, totalnominal labor compensation, total real labor compensation, etc.); and,4) a local or regional economic index (e.g., regional nominal grossdomestic product, regional real gross domestic product, regionalproductivity, regional nominal wages, regional real wages, etc.)

This context for the term “constant-dollar financial instrument” isapplicable herein, and private constant-dollar financial instruments maybe comprised of, utilize and/or be derived from one or more otherprivate constant-dollar financial instruments, where the term“constant-dollar financial instrument” applies to instruments whoseunits that are held constant may be any currency adjusted by any desiredprice index or other economic index.

Private constant-dollar financial instruments may or may not be“private” in the sense that the data regarding the instrument or theissuer is private. Indeed, in the case of a public issue of privateconstant-dollar financial instruments, federal and state securities lawsmandate extensive public disclosure of data regarding both thesecurities and the issuer of the securities.

Constant-dollar financial instruments may be converted into equivalentnominal-dollar financial instruments because payments presently are madein nominal dollars and because accounting, both for purposes ofreporting and for calculating taxes, is presently carried out in termsof nominal dollars. Two processes have been invented for performing saidconversion, both by an inventor herein. The first is disclosed in U.S.Pat. No. 5,237,500 and the second is disclosed in U.S. patentapplication Ser. No. 09/283,102, U.S. Pat. No. 6,760,710 B1, bothincorporated by reference herein. The U.S. patent application titled“MULTIPLE COMPUTER SYSTEM SUPPORTING A PRIVATE CONSTANT-DOLLAR FINANCIALPRODUCT” which was filed on Jul. 6, 2004 as a continuation-in-part ofU.S. Pat. No. 6,760,710 B1 is also incorporated by reference herein.

One embodiment is directed to managing a computer-aided method offunding, including a private constant-dollar financial instrument, mayinclude the step of converting any of said private constant-dollarinstruments into an equivalent nominal instrument. Various embodimentsof the computer control means (FIG. 1B) may include computer-aidedmethods for: 1) pricing private constant-dollar instruments; 2)servicing private-constant dollar instruments; 3) managing the risk ofprivate constant-dollar instruments; 4) the acquisition of privateconstant-dollar instruments; and/or 5) the sale of privateconstant-dollar instruments.

The value of a private constant-dollar instrument may be impacted by avariety of factors, including but not limited to: 1) the credit qualityof the instrument; 2) the real return of the instrument; 3) thefrequency with which nominal currency amounts are adjusted by the index(i.e., the frequency of adjustment); 4) the index that is used to adjustthe nominal currency amounts; and, 5) the underlying currency (e.g.,U.S. dollars, euros, yen, pesos, etc.).

The value of a tier of financial instruments may be determined bydetermining the value of the instruments comprising the tier. Therefore,in an illustrative embodiment (teaching, not to be confused withlimiting by way of the teaching) may include the steps of determining avalue of a tier responsive to: 1) credit quality of the instrumentscomprising the tier; 2) the real return of the instruments comprisingthe tier; 3) the frequency of adjustment of the instruments comprisingthe tier; 4) the index (or indices if more than one index) used toadjust the nominal currency amounts of the instruments comprising thetier; and, 5) the underlying currency or currencies of the instrumentscomprising the tier.

Private constant-dollar financial instruments that hold purchasing powerconstant (by adjusting the nominal currency amounts by an agreed uponprice index) are distinguished from other private financial instruments(i.e., financial instruments that are not constant-dollar instruments)by their virtual elimination of inflation risk and their ability toreduce default risk. They may also reduce interest rate risk becausereal interest rates are less volatile than nominal interest rates.Further, they may facilitate international finance by eliminating theinflation component of currency risk. An embodiment may include acomputer control means (FIG. 1B) for a computer-aided method of managingthe real currency risk that remains after the inflation component ofcurrency risk has been eliminated. The computer-aided method may useinflation-immunized currency futures, inflation-immunized currencyforwards, inflation-immunizes currency options, and/orinflation-immunized currency swaps in order to manage real currencyrisk.

Examples of private constant-dollar financial instruments include, butare not limited to:

-   -   1. Constant-dollar mortgages.    -   2. Constant-dollar construction loans.    -   3. Constant-dollar residential mortgages, where the mortgage or        deed of trust securing the note is a mortgage or deed of trust        on a 1 to 4 family residential property.    -   4. A constant-dollar reverse loan, including a constant-dollar        reverse mortgage which enables a consumer to tap the equity in        their residence by receiving payments of constant purchasing        power amounts, with the resulting constant-dollar loan being        repaid through the sale of the residence at some defined point.    -   5. Constant-dollar commercial mortgages, where the mortgage or        deed of trust securing the note is a mortgage or deed of trust        on commercial property including office, retail, industrial,        multi-family residential, and mobile-home properties.    -   6. Constant-dollar second mortgage or home-equity loans.    -   7. Constant-dollar second mortgage or deed-of-trust financing        for commercial properties.    -   8. Constant-dollar personal loans.    -   9. Constant-dollar auto loans.    -   10. Constant-dollar vehicle loans.    -   11. Constant-dollar loans to finance consumer durables.    -   12. Constant-dollar leases.    -   13. Constant-dollar leases to finance automobiles.    -   14. Constant-dollar leases to finance consumer durables.    -   15. Constant-dollar leases to finance boats or ships.    -   16. Constant-dollar leases to finance business property.    -   17. Constant-dollar leases to finance aircraft, aircraft        engines, airframes, combinations thereof, railroad rolling        stock, trucks, buses, trams, trollies or lorries.    -   18. Constant-dollar leases to finance real property.    -   19. Constant-dollar leveraged-leases where the lessor finances a        large portion of the purchase price of the asset with a        nonrecourse constant-dollar loan that is secured by a first        claim on the leased asset.    -   20. Constant-dollar business loans.    -   21. Constant-dollar term loans.    -   22. Constant-dollar notes.    -   23. Constant-dollar international lending contracts.    -   24. Constant-dollar bonds including bullets, serials,        zero-coupon and combinations thereof.    -   25. Constant-dollar fully-amortizing bonds.    -   26. Constant-dollar partially-amortizing bonds.    -   27. Constant-dollar bonds or loans or loans with any desired        amortization structure.    -   28. Constant-dollar bonds with sinking funds.    -   29. Constant-dollar private placement bonds.    -   30. Constant-dollar public issue bonds.    -   31. Constant-dollar medium-term notes, which are constant-dollar        bonds (that can be of any maturity, in spite of the name) that        are issued on a continuing basis over time rather than through        the batch process of traditional underwriting.    -   32. Constant-dollar debentures.    -   33. Constant-dollar subordinated debentures.    -   34. Constant-dollar capital notes.    -   35. Constant-dollar mortgage bonds.    -   36. Constant-dollar equipment trust certificates.    -   37. Constant-dollar asset-backed securities.    -   38. Constant-dollar mortgage-backed securities.    -   39. Constant-dollar preferred stock.    -   40. Constant-dollar fully-amortizing preferred stock.    -   41. Constant-dollar limited partnership units.    -   42. Constant-dollar preferred-return LLC (Limited Liability        Company) units.    -   43. Constant-dollar income bonds, where the issuing organization        makes the promised real (purchasing power) payment only if it        has income sufficient to make the payment. Payments that are not        paid may cumulate with or without compounding (payment of        interest on interest).    -   44. Constant-dollar deposits.    -   45. Constant-dollar certificates of deposit.    -   46. Constant-dollar Eurodollar deposits.    -   47. Constant-dollar currency, which is created when        constant-dollar deposits are made checkable and/or transferable        through electronic funds transfer means.    -   48. Constant-dollar insurance.    -   49. Constant-dollar whole life policies.    -   50. Constant-dollar universal life policies.    -   51. Constant-dollar variable life policies.    -   52. Constant-dollar annuities.    -   53. Constant-dollar fixed annuities.    -   54. Constant-dollar guaranteed investment contracts.    -   55. Constant-dollar municipal bonds.    -   56. Constant-dollar tax-exempt bonds.    -   57. Constant-dollar general obligation bonds.    -   58. Constant-dollar revenue bonds.    -   59. Constant-dollar double barrel bonds.    -   60. Constant-dollar instruments with variable real returns.    -   61. Constant-dollar instruments with caps and/or floors on the        equivalent nominal returns.    -   62. Constant-dollar instruments with caps or restrictions on the        nominal payment amounts.    -   63. Constant-dollar instruments with caps or restrictions on the        nominal balance amounts.    -   64. Constant-dollar instruments convertible into other        constant-dollar instruments.    -   65. Constant-dollar instruments that include options.    -   66. Constant-dollar instruments with the option to choose a        different (constant purchasing power) currency—e.g., constant        euros, constant yen, constant pounds, constant pesos, etc.    -   67. Constant-dollar instruments with the option to choose a        different index—e.g., a services cost index, a commodity cost        index, a gold price index, an oil price index, an energy price        index, etc.    -   68. Constant-dollar instruments convertible into common stock.    -   69. Common stock convertible into constant-dollar instruments.    -   70. Constant-dollar instruments with warrants attached.    -   71. Constant-dollar instruments convertible into nominal        instruments.    -   72. Nominal instruments convertible into constant-dollar        instruments.

The user of the funds (issuer of the constant-dollar instrument) may bedomiciled in U.S. and/or another country. The underlying currency mayU.S. dollars, Canadian dollars, Mexican pesos, British pounds, euros,yen, Australian dollars or any other currency. The instrument may offerthe investor and/or the issuer the option to choose from a list of oneor more currencies and/or one or more indices.

Private constant-dollar financial instruments may also include financialinstruments that are derived from one or more other privateconstant-dollar financial instruments. Possible examples of theseadditional possible private constant-dollar financial instrumentsinclude, but are not limited to:

-   -   1. Constant-dollar mutual fund shares, which are undivided        interests in the net assets of an open-end investment company        that invests predominantly in private constant-dollar financial        instruments.    -   2. Constant-dollar pass-through securities, which are undivided        interests in a pool of financial assets that are predominantly        private constant-dollar financial instruments.    -   3. Constant-dollar variable annuities, which are variable        annuities for which the investment portfolio for a variable        annuity is made up predominantly of private constant-dollar        financial instruments.    -   4. Constant-dollar separate accounts, which are separate        accounts of an insurance company that are invested predominantly        in a portfolio of private constant-dollar financial instruments.    -   5. Constant-dollar investment company shares, which are shares        in an investment company that invests predominantly in private        constant-dollar financial instruments.    -   6. Constant-dollar closed-end investment company shares, which        are shares in a closed-end investment company that invests        predominantly in private constant-dollar financial instruments.    -   7. Constant-dollar trusts, which are interests in trusts that        invest predominantly in private constant-dollar financial        instruments.    -   8. Constant-dollar unit investment trusts, which are unit        investment trusts that invest predominantly in private        constant-dollar financial instruments.    -   9. Constant-dollar pass-through securities issued by real estate        mortgage investment conduits, which are real estate mortgage        investment conduits that invest predominantly in private        constant-dollar mortgages.    -   10. Shares in constant-dollar real estate investment trusts,        which are real estate investment trusts that invest        predominantly in private constant-dollar financial instruments.    -   11. Constant-dollar swaps, which are swaps where one or more of        the payment streams involved in the swap is a payment stream of        a private constant-dollar financial instrument.    -   12. Constant-dollar pensions, which are pensions that pay fixed        purchasing power amounts.    -   13. Constant-dollar pension plans, which are pension plans that        invest predominantly in private constant-dollar securities.    -   14. Constant-dollar defined benefit plans, which are defined        benefit pension plans that invest predominantly in private        constant-dollar financial instruments.    -   15. Constant-dollar defined contribution plan, which are defined        contribution pension or retirement plans that invest        predominantly in private constant-dollar financial instruments.    -   16. Constant-dollar 401(k) or 403(b) plans, which are 401(k) or        403(b) plans that invest predominantly in private        constant-dollar financial instruments.    -   17. Constant-dollar Independent Retirement Accounts (IRAs),        which are IRAs that invest predominantly in private        constant-dollar financial instruments.    -   18. Constant-dollar Keoghs, UGMA, UTMA, Coverdell, Health        Savings Accounts, college savings plans, travel expense saving        account or other accounts designed or created to cover certain        expenses and may include tax incentives such as the ability to        invest with before tax dollars, defer taxes, eliminate taxes,        etc.    -   19. A constant-dollar futures contract, which is a futures        contract involving one or more private constant-dollar financial        instruments.    -   20. A constant-dollar currency futures contract, which is a        futures contract involving two constant-dollar currencies (e.g.,        constant dollars and constant euros, constant euros and constant        pounds, constant dollars and constant pesos, etc.).    -   21. A constant-dollar forward, which is a forward contract        involving one or more private constant-dollar financial        instruments.    -   22. A constant-dollar currency forward, which is a forward        contract involving two constant-dollar currencies (e.g.,        constant dollars and constant euros, constant euros and constant        pounds, constant dollars and constant pesos, etc.).    -   23. A constant-dollar options contract, which is an option        contract involving a private constant-dollar financial        instrument, a private constant-dollar future, a private        constant-dollar forward, or a private constant-dollar swap.    -   24. A constant-dollar derivative, which is a financial        derivatives contract involving a constant-dollar financial        instrument or product.

The term “tier” generally refers to a set of financial instruments. Aset of financial instruments is one or more financial instruments. Saidtier may be fixed (i.e., closed) or ongoing (open-ended).

A fixed, or closed, tier is defined by the fixed set of financialinstruments contained in the tier. A fixed tier may be completely fixedor it may allow (or, in some cases, require) some, some part, or all ofthe instruments in the tier to be replaced by other instruments subjectto specified qualifications, requirements, or limitations. A fixed tiermay have a finite life time defined by the life of the instruments thatit contains and/or the life of an other tier with which the tier isassociated.

A possible example of a fixed tier is a set of constant dollarmortgage(s) held by a real estate mortgage investment conduit (REMIC).Said set may include one or more constant dollar mortgages, saidconstant-dollar mortgage or mortgages being private constant dollarinstrument(s) that have been specified in the specifying step in thecomputer-aided funding process. Said specifying may include step ofdetermining various criteria for the origination or purchase of aconstant dollar mortgage, including a real return that is determinedusing market data that includes a market real interest rate. Anembodiment may include a computer control means (FIG. 1B) for acomputer-aided method of acquiring (originating and/or purchasing)constant dollar mortgages.

This is a fixed tier as the specified set of constant dollar mortgage(s)will remain unchanged with the exception of substitutions that may beallowed or required by the agreements governing the operation of theREMIC. In a possible example, the agreements governing the REMIC mayrequire the entity that organized the REMIC (possibly an investmentbanker, a mortgage banker, a commercial bank or other financialinstitution) to replace a constant dollar mortgage that go into defaultwith one or more constant dollar mortgages that meet certain standardsand are not in default. This tier may have a finite life equal to thelife of the longest-lived constant-dollar mortgage contained in thetier.

In this possible example, a second tier in a plurality of tiers might bea tier of financial instruments that are the liabilities of the REMIC.This other tier may include constant pass-through securities, constantdollar mortgage-backed securities, an equity or high-yield piece, and/orother financial instruments.

This other tier is associated with the tier comprised of constant dollarmortgage(s) through the vehicle of the REMIC and this other tier,through this association, funds the one tier comprised of constantdollar mortgage(s). This funding of one tier by an other may involvedetermining, among other things, that: 1) the net sale proceeds of theother tier is sufficient to pay the costs of originating and/orpurchasing the constant-dollar mortgages contained in the one tier; 2)the cash flows of the constant-dollar mortgage(s) in the one tier arenot less than the cash flows of the financial instruments in the othertier; 3) the real return on the constant-dollar mortgage(s) in the onetier is not less than the real return on the instruments comprising theother tier; 3) the real returns on the instruments comprising the secondtier are, when evaluated using market data including a real interestrate, consistent with their required real return given their risk; 4)the splitting, by maturity and/or priority of claims, of the aggregatecash flows of the constant dollar mortgage(s) comprising the one tieramong the instruments among the instruments comprising the other tierprovides the lowest real cost of funding the one tier by the other; and,5) the real return on the equity or high-yield piece, if any, isconsistent with the required return given its risk.

In a possible embodiment, the computer control means (e.g., theembodiment in FIG. 1B). The computer system can have control means,varying from a menu to other means facilitating human-engaged,interactive, or aided control over the computer system or part thereof,so as to enable and disenable carrying out some or all of thefunctionality characterized representatively herein. See, e.g.,embodiments, etc., discussed herein.) Representatively (and not herebylimiting), the functionality can include managing a computer-aidedmethod for selling the securities making up a tier that is funding another tier. The computer-aided selling method may use or include acomputer-aided method for pricing and/or a computer-aided method forrisk management.

The process of specifying the other tier may involve associating cashflow from the one tier comprising constant dollar mortgage(s) with theother tier. This process of associating may include, in the process ofspecifying the instruments comprising the other tier, the step ofcomputing aggregate cash flows of the one tier comprising constantdollar mortgage(s) to produce homogenous securities in the other tier. Apossible example of this process would be to aggregate the cash flows ofthe one tier comprising constant dollar mortgage(s) and to divide themequally among a number of constant dollar pass-through securitiescomprising the other tier. These constant dollar pass-through securitiescomprising the other tier would be homogeneous because each wouldrepresent an undivided interest in the cash flows produced by theconstant dollar mortgage(s) comprising the one tier. This homogeneitycreates liquidity for the constant dollar pass-through securities, thusenabling the other tier comprised of constant dollar pass-throughsecurities to securitize the one tier comprised on constant dollarmortgage(s).

Because each constant dollar pass-through security represents anundivided interest in the cash flows produced by the constant-dollarmortgage(s) comprising the one tier, each security would be identical interms of risk and maturity. However, different suppliers of funds(purchasers of the financial instruments comprising the other tier beingsuppliers of funds) may have different preferences regarding risk andmaturity. As a result, it may be possible to reduce the cost of fundingthe one tier comprised of constant dollar mortgage(s) with the othertier by disaggregating the homogenous securities comprising the othertier, splitting them by claims priorities and/or maturity times.

A possible example of this disaggregating homogeneous securities bysplitting would be to specify constant dollar mortgage-backed securitiesin the other tier. A splitting by maturity times might includespecifying a maturity schedule for the other tier comprised of constantdollar mortgage-backed securities. Said specifying may includeassociating a maturity of the constant dollar mortgage-backed securitiescomprising the other tier with a maturity of the constant dollarmortgage(s) comprising the one tier. A splitting by priority of claimsmight create a number of classes of instruments in the other tier. As apossible example: senior constant dollar mortgage-backed securities withfirst claim on the payments and principal of the constant dollarmortgages comprising the one tier; subordinated constant dollarmortgage-backed securities with second claim on cash flow and principal;junior subordinated constant dollar mortgage-backed securities withthird claim on cash flow and principal; and an equity or high-yieldpiece with last claim on the cash flow and principal of the constantdollar mortgages comprising the one tier.

The funding of the one tier comprised of constant dollar mortgages bythe other tier comprised of constant-dollar mortgage-backed securitiestransforms the liability of a user of funds into an asset of supplier offunds using said tiers. This transformation using said tiers may providebenefits to both suppliers and users of funds by: 1) creating liquidityfor suppliers of funds as a result of securitization; 2) providing avariety of real return/risk choices for suppliers of funds; 3) providinga variety of real return/maturity choices for suppliers of funds; and,4) increasing the availability of funds and reducing their cost forusers of funds.

Users of funds who may benefit from the funding created by theassociation of said tiers may include homeowners, investors in realestate and businesses owning real estate. Suppliers of funds who maybenefit from the funding may include, among others: households;investment companies; mutual funds; pension funds; depositoryinstitutions; commercial banks; credit unions, etc. To the extent thatthe suppliers of funds involved in the funding are financialintermediaries (investment companies; mutual funds; pension funds;depository institutions; commercial banks; credit unions, etc.), theresult is to involve one or more tiers intermediate that are not withinthe portion of said tiers that are associated in the funding. Forexample, the purchase of some of the constant-dollar mortgage-backedsecurities by a mutual fund that invests in constant-dollar securitiesinvolves in the funding a tier of constant-dollar mutual fund sharesintermediate that is not within the portion of said tiers that areassociated in the funding.

Documentation of the funding may be generated by a computer, or by morethan one computer. The computer system of the REMIC, or an othercomputer system such as the computer system of the entity that formedthe REMIC (e.g., an investment banker, a mortgage banker, a commercialbank, a finance company, a credit union, etc.) may generatedocumentation that may include documentation for one or more privateconstant-dollar instruments within any of said tiers, documentationregarding the sale, purchase and/or origination of any said instruments,etc.

An other computer system may be involved in generating documentation forone or more private constant-dollar instruments in any of said tiers. Apossible example is a REMIC formed by a finance company with the financecompany purchasing some or all of the constant-dollar mortgagescomprising the one tier from one or more mortgage bankers. Thedocumentation for the constant-dollar mortgages may be generated by themortgage banker(s) from which the finance company purchases themortgages. The finance company may engage the services of an investmentbanker to structure the constant-dollar mortgage-backed securitiescomprising the other tier, underwrite the securities and market thesecurities. The investment banker computer may then generate thedocumentation for the constant-dollar mortgage-backed securities.

An embodiment may include a computer-aided method for servicing any ofsaid constant-dollar instruments in any of said tiers. The computercontrol means (FIG. 1B) may break down the process of servicing intocomponents, including (but not limited to): 1) monitoring for compliancewith terms and covenants of the instrument; 2) managing the payments andaccounting for the instrument; and, 3) managing defaults in the event ofa default. Said servicing may be performed by one computer or by morethan one computer. In the possible example of a REMIC formed by afinance company, the servicing of a constant-dollar mortgage in the onetier may be performed by the computer of a mortgage banker, the computerof the finance company, or an other computer or computers. The servicingof the constant-dollar mortgage-backed securities in the other tier maybe performed by a servicing computer operated by a commercial bank or byan other computer or computers.

It may be that all of the constant-dollar mortgages comprising the onetier are in one currency (e.g., U.S. dollars) and that theconstant-dollar mortgage-backed securities comprising the other tier arein the same currency, determining a funding in only one currency.

It may be that one or more of the constant-dollar mortgages comprisingthe one tier are in a currency or currencies different from the currencyor currencies of the constant-dollar mortgage-backed securitiescomprising the other tier. As a possible example, the constant-dollarmortgages comprising the one tier may be in Mexican pesos (constant-pesomortgages) or in a variety of developing country currencies and theconstant-dollar mortgage-backed securities may be in U.S. dollars (oreuros or some combination of developed country currencies). If more thanone currency is involved in the funding, the funding may include a stepof determining a value of one or more tiers responsive to currency.

An embodiment may include a computer control means (FIG. 1B) for acomputer-aided risk management system that may be used to assess andmanage the risks that may arise as a result of funding one tier withanother tier. In the process of assessing and managing risk, thiscomputer-aided risk management system may utilize the computer-aidedmethod for pricing a constant-dollar instrument. It may assess interestrate risk by determining the possible variation in real interest ratesand determining the impact of that variation on the value of theinstruments composing each of the tiers.

In the event that the currencies underlying the instruments composingone tier differ from the currencies underlying the instruments composingan other tier, the computer-aided risk management system may assess thereal exchange rate risk by determining the possible variation in realexchange rates and determining the impact of that variation on the valueof the instruments composing each of the tiers. It may also determinethe risk and return of various strategies for managing the possible realcurrency risk using inflation-immunized currency futures, forwards,options and/or swaps.

The computer-aided method for managing risk may include the capabilityto assess and manage the default risk of the instruments composing oneor more of the tiers. The computer-aided method for managing risk mayinclude, or work with, a computer-aided method for managing defaults.

An embodiment can include tiers that are ongoing, or open-ended ratherthan fixed. In an ongoing, or open-ended, tier instruments may be addedor removed over time. The size of the tier (as measured by the number ofinstruments, the principal amount of the instruments, etc.) may grow orshrink over time. There may or may not be restrictions, limitations,requirements, regulations, etc. which may limit, affect or otherwisedetermine the instruments which may be added or removed from an ongoingtier.

As a possible example, consider an ongoing tier of instruments that areassets of an insurance company. Regulators of the insurance company mayput forth regulations stating that any instrument added to the tier mustbe rated as “investment grade” with regard to credit risk. The insurancecompany may have a set of requirements, guidelines, etc. that furtherlimit or determine whether or not an instrument may be added to the tier(e.g., loan-to-value and debt coverage standards for commercial realestate loans).

In addition to an ongoing tier of instruments that are assets of theinsurance company, the insurance might also have an ongoing tier ofprivate constant-dollar financial instruments that are assets of aseparate account of the insurance company. Said tier may, depending onthe investment guidelines set by the insurance company, be comprised ofmore than one type of private constant-dollar financial instrument(e.g., constant-dollar corporate bonds, constant-dollar mortgages,constant-dollar mortgage-backed securities, constant-dollar asset-backedsecurities, constant-dollar preferred stock, etc.).

In this possible example, undivided interests in said separate accountmay comprise a tier intermediate within the portion of tiers that areassociated in the funding. The tier of private constant-dollarinstruments that are assets of the separate account may be funded byassociating said tier with a tier of constant-dollar insurance andannuity instruments sold by the insurance company, with tier ofundivided interests in said separate account intermediate within theportion of tiers associated in the funding.

In funding an ongoing tier of private constant-dollar financialinstruments by associating it with an other ongoing tier comprised ofconstant-dollar insurance and annuity instruments, the computer of theinsurance company is transforming the liability of a user of funds intoan asset of a supplier of funds using said tiers.

An embodiment may include a computer control means (FIG. 1B) for acomputer-aided method for pricing instruments, servicing instruments,risk management, acquiring instruments, and/or selling instruments.

As another possible example of funding involving the association ofongoing tiers, consider a finance company. The one ongoing tier,comprised of instruments that are assets of the finance company, may(depending on the investment guidelines of the finance company) include,but not be limited to, some combination of:

-   -   1. Constant-dollar mortgages.    -   2. Constant-dollar construction loans.    -   3. Constant-dollar residential mortgages, where the mortgage or        deed of trust securing the note is a mortgage or deed of trust        on a 1 to 4 family residential property.    -   4. A constant-dollar reverse loan, especially a constant-dollar        reverse mortgage which enables a consumer to tap the equity in        their residence by receiving payments of constant purchasing        power amounts, with the resulting constant-dollar loan being        repaid through the sale of the residence at some defined point.    -   5. Constant-dollar commercial mortgages, where the mortgage or        deed of trust securing the note is a mortgage or deed of trust        on commercial property including office, retail, industrial,        multi-family residential, and mobile-home properties.    -   6. Constant-dollar second mortgage or home-equity loans.    -   7. Constant-dollar second mortgage or deed-of-trust financing        for commercial properties.    -   8. Constant-dollar personal loans.    -   9. Constant-dollar auto loans.    -   10. Constant-dollar vehicle loans.    -   11. Constant-dollar loans to finance consumer durables.    -   12. Constant-dollar leases.    -   13. Constant-dollar leases to finance automobiles.    -   14. Constant-dollar leases to finance consumer durables.    -   15. Constant-dollar leases to finance boats or ships.    -   16. Constant-dollar leases to finance business property.    -   17. Constant-dollar leases to finance aircraft, aircraft        engines, airframes, combinations thereof, railroad rolling        stock, trucks, buses, trams, trollies or lorries.    -   18. Constant-dollar leases to real property.    -   19. Constant-dollar leveraged-leases where the lessor finances a        large portion of the purchase price of the asset with a        nonrecourse constant-dollar loan that is secured by a first        claim on the leased asset.    -   20. Constant-dollar business loans.    -   21. Constant-dollar term loans.    -   22. Constant-dollar notes.    -   23. Constant-dollar international lending contracts.    -   24. Constant-dollar bonds.    -   25. Constant-dollar fully-amortizing bonds.    -   26. Constant-dollar private placement bonds.    -   27. Constant-dollar public issue bonds.    -   28. Constant-dollar medium-term notes, which are constant-dollar        bonds (that can be of any maturity, in spite of the name) that        are issued on a continuing basis over time rather than through        the batch process of traditional underwriting.    -   29. Constant-dollar debentures.    -   30. Constant-dollar subordinated debentures.    -   31. Constant-dollar capital notes.    -   32. Constant-dollar mortgage bonds.    -   33. Constant-dollar equipment trust certificates.    -   34. Constant-dollar asset-backed securities.    -   35. Constant-dollar mortgage-backed securities.    -   36. Constant-dollar preferred stock.    -   37. Constant-dollar fully-amortizing preferred stock.    -   38. Constant-dollar limited partnership units.    -   39. Constant-dollar preferred-return LLC (Limited Liability        Company) units.    -   40. Constant-dollar income bonds, where the issuing organization        makes the promised real (purchasing power) payment only if it        has income sufficient to make the payment. Payments that are not        paid may cumulate with or without compounding (payment of        interest on interest).

An other ongoing tier, comprised of instruments that are liabilities ofthe finance company, is associated with the one ongoing tier in thefunding of the one ongoing tier by the other ongoing tier. The othertier may include, but not be limited to, some combination of:

-   -   1. Constant-dollar debentures.    -   2. Constant-dollar subordinated debentures.    -   3. Constant-dollar capital notes.    -   4. Constant-dollar asset-backed securities.    -   5. Constant-dollar income bonds.    -   6. Constant-dollar preferred stock.

In the process of funding the one ongoing tier with the other ongoingtier, the finance company may: 1) sell constant-dollar instrumentscomprising the other tier and then purchase and/or originateconstant-dollar instruments comprising the one tier; 2) purchase and/ororiginate constant-dollar instruments comprising the one tier and thensell constant-dollar instruments comprising the other tier; 3)simultaneously sell constant-dollar instruments comprising the othertier and purchase and/or originate constant-dollar instrumentscomprising the one tier; or, 4) practice some combination of thepreceding.

An embodiment may include a computer control means (FIG. 1B) for acomputer-aided method for pricing instruments in one or both ongoingtiers, servicing instruments in one or both ongoing tiers, managingrisk, acquiring instruments in one or both ongoing tiers, and/or sellinginstruments in one or both ongoing tiers.

In funding an ongoing tier of private constant-dollar financialinstruments by associating it with an other ongoing tier comprised ofliabilities of the finance company, the computer-aided method of fundingis transforming the liability of a user of funds into an asset of asupplier of funds using said tiers.

In an embodiment may include a computer-aided method for pricing aprivate constant-dollar instrument, the initial choices in the computercontrol means (FIG. 1B) may be (182): 1) given a real rate of return,determine price; and, 2) given a price, determine a real rate of return.If the choice is to determine a price given a real rate of return, thenext step may to input a real interest return, including a specificationof the period of the return (e.g., the real return per year) and thenumber of times that the return is compounded during the period (e.g.,compounded once per year), the terms and agreements of the instrument,and the servicing record (if any) of the instrument. The terms mayinclude the frequency of payments and the frequency of adjustment forinflation. If the payment period is as long or longer than theadjustment period (e.g. monthly payments and monthly adjustments forinflation, semi-annual payments and monthly adjustments for inflation,semi-annual payments and semi-annual adjustments for inflation, etc.),one pricing process may be chosen. A different process may be chosen ifthe payment period is shorter than the adjustment period (e.g., monthlypayments and annual adjustment for inflation).

If the payment period is as long or longer than the adjustment period,the process may pricing process may begin by entering data from thefinancial instrument and the servicing of the financial instrument. Thesystem may then determine the number, amount and timing of the remainingconstant dollar payments. The system may then convert theconstant-dollar amounts to amounts based on the purchasing power of thedollar today. The system may convert the input real rate of return intoan equivalent real rate for the payment period with compoundingfrequency of once per payment period (the input real rate may be for atime period different than the payment period and/or it may have acompounding period different from the payment period). The system maydiscount the scheduled future constant dollar amounts (measured in thepurchasing power of the dollar today) at the real return per paymentperiod (compounded once per payment period) to determine the price (thepresent value of the scheduled future constant dollar amounts—measuredin the purchasing power of today's dollar—discounted at the input realrate) of the instrument in today's dollars.

Consider an instrument that has equal real (constant-dollar) paymentsevery six months and is fully amortizing over 30 years. Ten of thescheduled sixty equal real payments have been made and the remainingfifty will be paid every six months. If the adjustment period equals thepayment period (six months), the servicing data may include both theamount of the most recent payment in nominal dollars and the amount ofthe next scheduled payment in nominal dollars. If the adjustment periodis shorter than the payment period (e.g., adjustment for inflation everymonth vs. a payment every six months), the servicing data may notinclude the nominal dollar amount of the next scheduled payment,although it will include the nominal dollar amounts of all previouspayments, including the latest payment.

The system may use the nominal dollar amount of the latest payment andthe current inflation rate to determine the amount of the equal realpayments measured in the purchasing power of the dollar today. It mayuse the nominal dollar amount of the next scheduled payment (ifavailable) and the current inflation rate to determine the amount of theequal real payments measured in the purchasing power of the dollartoday. If inf is the current inflation rate per payment period (not peryear unless the payment period is one year), compounded once per period,then the equal real (constant-dollar) payment amount expressed in thepurchasing power of the dollar today may be calculated by multiplyingthe nominal dollar amount of the latest payment by (1+inf){circle around( )}(n/N) where N is the number of days in the current payment periodand n is the number of days of the current payment period that haveelapsed to date. If the amount of the next scheduled payment in nominaldollars is known, the equal real (constant-dollar) payment amountexpressed in the purchasing power of the dollar today may be calculatedby dividing the nominal dollar amount of the next payment by[(1+inf){circle around ( )}(m/N)] where N is the number of days in thecurrent payment period and m is the remaining number of days in thecurrent payment period.

The system may then convert the input real rate of return into anequivalent real rate for the payment period with compounding frequencyof once per payment period. For example, suppose that the input realrate of return was input in the units of a bond rate of interest (annualrate with semi-annual compounding). In this case, the system woulddetermine the real rate of return per six-month payment period(compounding every six months) by dividing the input real return by 2.If the real rate of return was input as an effective annual rate ofinterest (annual rate with annual compounding), the system woulddetermine the real rate per six-month period (with six-monthcompounding) r_(p) by adding one to the input real rate r_(i), raisingthe quantity to the one-half power, and subtracting one:r_(p)=(1+r_(i)){circle around ( )}(½)−1.

The system may then determine the price (the present value of thescheduled future constant dollar amounts—measured in the purchasingpower of today's dollar—discounted at the input real rate) of theinstrument in today's dollars by: 1) finding the present value of anordinary annuity with 50 equal constant payments (the constant-dollarpayment amount in the purchasing power of today's dollar) at an interestrate or r_(p) per period; and, 2) adjusting for the amount of thecurrent payment period that has elapsed to date. The adjustment for theamount of the payment period that has elapsed may be made by multiplyingthe present value of the annuity by (1+r_(p)){circle around ( )}(n/N)where N is the number of days in the current payment period and n is thenumber of days of the current payment period that have elapsed to date.The system may then output the price as the current value of theinstrument given the input real rate of return.

If the payment period is shorter than the adjustment period forinflation (e.g., a constant-dollar mortgage with monthly payments andannual adjustments for inflation), the process may determine anequivalent, end of adjustment period, constant-dollar payment amountequal to the future value of the nominal payment amounts specifiedduring the adjustment period (note that the process for converting aconstant-dollar instrument into an equivalent nominal-dollar instrumentmay calculate an equivalent, end-of-adjustment period constant-dollaramount as a part of the conversion process if the payment period isshorter than the adjustment period).

The pricing process may begin by entering data from the financialinstrument and the servicing of the financial instrument. The system maythen determine the number, amount and timing of the remainingequivalent, end-of-adjustment period, constant-dollar payments. Thesystem may then convert the equivalent, end-of-adjustment period,constant-dollar amounts to amounts based on the purchasing power of thedollar today. The system may convert the input real rate of return intoan equivalent real rate for the adjustment period with a compoundingfrequency of once per adjustment period (the input real rate may be fora time period different than the adjustment period and/or it may have acompounding period different from the adjustment period). The system maydiscount the scheduled equivalent, end-of-adjustment period, futureconstant-dollar amounts (measured in the purchasing power of the dollartoday) at the real return per adjustment period (compounded once peradjustment period) to determine the price (the present value of thescheduled future constant dollar amounts—measured in the purchasingpower of today's dollar—discounted at the input real rate) of theinstrument in today's dollars before adjustment for the value of thepayments (if any) that have already been made in the current adjustmentperiod. The price may then be calculated as the present value of theequivalent, end-of-adjustment period, constant-dollar payment amounts,minus the value today (adjusted for the time value of impact of the realrate of return and the current rate of inflation) of the payments thathave already been made in the current adjustment period.

Consider a 30 year, fully-amortizing constant-dollar mortgage with equalreal monthly payments. The mortgage is in its third year, so two of the30 equivalent, end-of-adjustment period (one year), constant-dollarpayments have been received and 28 of the equivalent, end-of-adjustmentperiod (one year), constant-dollar payments are scheduled to be receivedin the future (although some portion of the third year equivalent,end-of-adjustment period, constant-dollar payment may have been receivedif one or more of the monthly payments for the current adjustment periodhave been make. The servicing data will provide the current nominaldollar amount (for the duration of the adjustment period) of the monthlypayments. The system may convert the input real rate of return into anequivalent real rate for the adjustment period with compoundingfrequency of once per adjustment period. For example, suppose that theinput real rate of return was input in the units of a mortgage rate ofinterest (annual rate with monthly compounding). In this case, thesystem would determine the real rate of return per adjustment period(annual compounding), r_(p), by dividing the input real rate of return,r_(i), by 12, adding one and raising the quantity to the twelfth power,and subtracting one: r_(p)=(1+r_(i)/12){circle around ( )}(12)−1.

The system may then use the current inflation rate for the adjustmentperiod (compounded once per adjustment period), inf, the real rate ofreturn per adjustment period, r_(p), and the nominal dollar amount ofthe current monthly payment, PMT, to calculate the equivalent,end-of-adjustment period, constant-dollar payment (expressed in dollarswith the purchasing power of a dollar at the end of the current paymentperiod). The equivalent, end-of-adjustment period, constant-dollarpayment (in the dollars of the end of the current adjustment period) maybe calculated as the future value (at the end of the adjustment period)of the 12 equal monthly nominal dollar payments for the current period.This a future value of annuity calculated at the nominal interest ratecorresponding to rp and inf, which equals:PMT*{[(1+r_(p))*(1+inf)]−1}/{[(1+r_(p))*(1+inf)]{circle around ( )}(1/12)−1}

The system may convert the resulting equivalent, end-of-adjustmentperiod, constant-dollar amount—which is in terms of the purchasing powerof an end-of-adjustment period dollar—to constant dollars measured interms of the purchasing power of a dollar today by dividing by thequantity [(1+inf){circle around ( )}(m/N)] where N is the number of daysin the current adjustment period and m is the remaining number of daysin the current adjustment period.

The system may then determine the price of the instrument in today'sdollars by: 1) finding the present value of an ordinary annuity with 28equal constant payments (the number of remaining equivalent,end-of-adjustment period, constant-dollar payments measured in thepurchasing power of today's dollar) at an interest rate or r_(p) perperiod; 2) adjusting the present value of the annuity for the amount ofthe current adjustment period that has elapsed to date; and, 3) reducingthe present value by value today of the nominal dollar monthly payments(if any) that have been already made in the current adjustment period.

The adjustment for the amount of the payment period that has elapsed maybe made by multiplying the present value of the annuity by(1+r_(p)){circle around ( )}(n/N) where N is the number of days in thecurrent adjustment period and n is the number of days of the currentadjustment period that have elapsed to date. If monthly payments havealready been made during the current adjustment period, they must beadjusted to their value today (using the nominal interest rateequivalent to the real interest rate and the current inflation rate),and that value today subtracted from the adjusted present value of theannuity to get the price. A monthly payment (in nominal dollars) thathas already been made in the current adjustment period is adjusted toits value today by multiplying PMT by {[(1+r_(p))*(1+inf)]{circle around( )}(p/N)}, where p is the number of days since the payment was made andN is the number of days in the current adjustment period. The system maythen output the price as the current value of the instrument given theinput real rate of return.

If the choice for the pricing process is to determine the real rate ofreturn given a price, the computer-aided method may combine an iterativeprocess with the process for determining a price given a real rate ofreturn in order to determine the real rate of return that makes thecalculated value (the present value of future constant-dollar cashflows) equal to the input price. An initial real rate of return may beentered (or generated by the system) and a price calculated for thatreal rate of return. If the calculated price is greater than the inputprice, the iterative process may generate a higher real rate of returnand calculate a price. If the new calculated price is lower than theinput price, the iterative process may generate a real rate of returnthat is between the two initial real rates and calculate a price, withthe iterative process continuing until it converges to a real rate ofreturn that makes the calculated price equal to (within a specifiedmargin of error) equal to the input price. The system may then outputthat real rate of return as the real rate of return on the instrumentgiven the input price.

In one embodiment, the computer-aided method for managing risk mayinclude, or work together with, a computer-aided system for thedetermination of inflation-immunized exchange rates and variations andapplications thereof. In one possible variation, the computer-aidedsystem may determine inflation-immunized prices of commodities, such asoil, and possible applications thereof, such as inflation-immunizedfutures and options for commodities. The computer control means in FIG.1B may interconnect with, or work with the computer system controldevise of FIG. 4 if the user chooses the risk management option in themain menu and then the currency risk option in the risk managementsubsystem. The computer-aided system for the determination ofinflation-immunized exchange rates may be used in conjunction with thedetermination of real exchange rate risk and/or in the management ofreal exchange rate risk.

The computer support for the computer-aided system forinflation-immunized exchange rates may be implemented by one computersystem or it may be implemented by multiple computer systems that may beconnected or networked together in an ongoing manner, intermittently, orone time. The computer system (FIG. 5) may include a computer, an inputdevice such as a keyboard, a storage device, a disk including softwareand a computer program, and an output device such as a screen and/or aprinter. The computer system (FIG. 5) may include a computer controlsystem (FIG. 4) or it may interact with the computer control systemthrough an input means and/or a connection such as the internet, anintranet and/or other computer systems. The computer system may alsoinclude connection(s) to the Internet, an intranet, and/or othercomputer systems.

In one embodiment, said computer support may include a device (FIG. 4)or programmed system (one, the other, or both collectively being a meansfor) controlling a computer system that may determine and/or applyinflation-immunized exchange rates. The means for controlling thecomputer system may include a menu displayed on a computer screen. Themenu may offer choices, including: entering the currencies for whichinflation-immunized exchange rates are determined; entering which of thecurrencies is to be the numerator of the inflation-immunized exchangerates (with the other currencies then being denominator currencies);entering an index which is used to immunize the numerator currency;entering an index (indices) which is use to immunize the numeratorcurrency (currencies); entering a base time period to which thepurchasing power of the currencies are to be set; entering spot (notinflation-immunized) exchange rate data; determining theinflation-immunized exchange rates; and outputting the inflationadjusted exchange rates.

The data for the spot exchange (and/or the data for indices used toimmunize the currencies) may be entered electronically through aconnection to one or more other computer systems (e.g., a reportingcomputer system and/or a trading computer system). An electronicconnection may enable the computer system to determine (and output) theinflation-immunized exchange rates in real time. The indices that serveas the basis for immunizing a currency may be any price index or anyother index or combination of indices from an economy or economy thatuses that currency as a medium of exchange. For economies that issueinflation-linked (also known as constant-dollar or constant-currency)securities, the system may choose to use that price index (the ConsumerPrice Index for all Urban consumers, not seasonally adjusted, or CPI-U,in the case of the U.S.) that is used to adjust TreasuryInflation-Protection Securities (TIPS) for inflation. This may increasethe value of the hedges (i.e., futures contracts, forward contracts,option contracts, etc.) that may be created using theinflation-immunized currency exchange rates.

The computer-aided system may be implemented by one computer system(FIG. 5) or more than one computer system (FIG. 5A). If implemented bymore than one computer system, the computer-aided system may include(but is not limited to): one or more reporting computer systems; one ormore trading computer systems; one or more broker computer systems; oneor more dealer computer systems; one or more investment banking computersystems; one or more commercial bank computer systems; one or moreinvestment management computer systems; and one or more governmentcomputer systems. The computer systems may be connected by one or moresystems (e.g., the Internet, Intranet(s), hard-wire, etc.) forconnecting computer systems. The computer systems may be connectedintermittently, continuously or on a one-time basis.

Any computer system that may be involved, regardless of whether one ormore is involved, may be in any form or combination, including, but notlimited to: a mainframe computer and terminal(s) configuration, aclient/server computer configuration, a configuration comprised of apersonal computer, a desk-top computer, a lap-top computer, a pocketcomputer, a palm computer, a personal digital assistant, a digital cellphone or other portable device, but other ways of thinking, embodimentscan extend to comprising a Wi-Fi node, an embedded processor, a car orother vehicle computer, a light-wave computer, a biological or hybridcomputer, a quantum computer, etc.

If more than one computer system is involved, the computers may beconnected, or not connected, in any pattern. The connections need not becontinuously maintained; they may be intermittent, one-time or ongoing.One or more of these connections may involve the use of the Internet, anintranet, e-mail, instant messaging, text messaging, voice mail, a localarea network (LAN), a wide area network (WAN), a twisted pair of copperwires, a coaxial cable, a cellular network, Wi-Fi, wide area Wi-Fi, aWi-Fi network, a light-wave transmission, infrared, and/or a wirelessconnection. One of more of the connections may involve one-waycommunication only. One or more may involve two-way communication. Realtime communications are another possibility.

More than one of any variety of computer system may be involved in thecomputer-aided system for inflation-immunized exchange rates. Forexample, there may be more than one reporting computer system, more thanone trading computer system, etc.

One (of many distinct) embodiment(s) is a computer-aided system forinflation-immunized exchange rates. The use of inflation-immunizedexchange rates may remove risk from the financing process, create newinvestment opportunities, and improve risk management.Inflation-immunized exchange rates may be especially valuable when usedin conjunction with constant-dollar financial instruments. When used inconjunction with constant-dollar financial instruments,inflation-immunized exchange rates may be used (e.g., in futurescontracts, forward contracts, swaps contracts and/or option contracts)to reduce currency risk and enhance international investmentopportunities. This in turn may lead to an increase in global prosperityand a reduction in present disparities of economic incomes andopportunities.

Constant-dollar financial instruments are financial instruments whoseterms (e.g., payment amounts, rate of return or interest rate, scheduleof remaining principal balances, etc.) can be specified in units ofconstant purchasing power, such as dollars that have been adjusted usingan index such as a price index (for example, one of the variations ofthe Consumer Price Index) so as to maintain constant purchasing power(i.e., they are inflation-immunized financial instruments). However, theterm “constant-dollar financial instrument” can apply to financialinstruments whose terms are specified in units that are held constant inpurchasing power and/or are adjusted through the application of anyspecified index.

The units that are held constant in purchasing power and/or are adjustedby an index may be any currency (not just dollars) and they may be heldconstant and/or adjusted by any desired price index or other economicindex. In the event of private constant-dollar instruments that arederived from one or more other private constant-dollar instruments,there may be more than one currency and more than one index involved.The currency (or currencies) may be any national currency (e.g., U.S.dollars, Canadian dollars, Australian dollars, Mexican pesos, Britishpounds, Swiss francs, euros, yen, rubles, zlotys, Danish kroner, etc.)or any other variety of currency including private and/or localcurrencies. Possible varieties of price or other indexes may include,but are not limited to: 1) a price index for the respective nationaleconomy as a whole (e.g., in the U.S., the consumer price index for allurban consumers, the gross domestic product deflator, etc.); 2) a priceindex for some component of the respective national economy (e.g., ahealth care price index, a housing price index, a commodity price index,an index made up of a single price such as the price of gold or theprice of oil, an export price index, an import price index, a tradedgoods index, a wholesale price index, a goods price index, an electronicgoods price index, a services price index, the consumer price index fora specified urban area, the consumer price index for a specified region,etc.); 3) an economic index for the respective national economy as awhole (e.g., in the U.S., the nominal gross domestic product, the realgross domestic product, productivity, nominal wages, real wages, totalnominal labor compensation, total real labor compensation, etc.); and,4) a local or regional economic index (e.g., regional nominal grossdomestic product, regional real gross domestic product, regionalproductivity, regional nominal wages, regional real wages, etc.)

Constant-dollar financial instruments may be converted into equivalentnominal-dollar financial instruments because payments presently are madein nominal dollars and because accounting, both for purposes ofreporting and for calculating taxes, is presently carried out in termsof nominal dollars. Two processes have been invented for performing saidconversion, both by an inventor herein. The first is disclosed in U.S.Pat. No. 5,237,500 and the second is disclosed in U.S. patentapplication Ser. No. 09/283,102, U.S. Pat. No. 6,760,710 B1, bothincorporated by reference herein. The U.S. patent application titled“MULTIPLE COMPUTER SYSTEM SUPPORTING A PRIVATE CONSTANT-DOLLAR FINANCIALPRODUCT” which was filed on Jul. 6, 2004 as a continuation in part ofU.S. Pat. No. 6,760,710 B1 is also incorporated by reference herein.Further, U.S. patent application Ser. No. 10/957,399 titled “ACOMPUTER-AIDED PROCESS OF FUNDING, INCLUDING A PRIVATE CONSTANT-DOLLARINSTRUMENT” which was filed Oct. 1, 2004 is also incorporated byreference.

Private constant-dollar financial instruments can be financinginstruments issued by (i.e., they are liabilities of or interests in)funds users who are subject to default risk, including (but not limitedto): individuals, households, for-profit businesses, corporations,partnerships, limited partnerships, sole proprietorships, financialintermediaries, depository institutions, banks, credit unions, thrifts,savings and loans, savings banks, insurance companies, investmentcompanies, real estate investment trusts (REITS), limited-liabilitycompanies, not-for-profit businesses, nongovernmental organizations,trusts, real estate mortgage investment conduits (REMICS), otherpass-through entities, municipal governments (state and localgovernments), agencies of municipal governments, school districts, waterdistricts, transportation districts, other special purpose districts,and federally sponsored enterprises (e.g., Federal National MortgageAssociation, Federal Home Loan Mortgage Corporation, etc.). The issuersof private constant-dollar financial instruments may be domiciled in theU.S. or in other countries. They may be payable in the currency of thecountry in which they are issued or in any other currency.

Unlike the federal government, the issuers of private constant-dollarfinancial instruments do not have the power to print money. Therefore,unlike securities issued by the national or federal government, privateconstant-dollar financial instruments are subject to default risk andthis default risk may be reduced by matching the payments promised bythe instruments to the expected future revenues of the issuer. The fixedreal (purchasing power) payments of the private constant-dollarfinancial instruments can be tailored to produce a reasonable, or eventhe best possible, match between promised real payment amounts and theexpected future real revenues of the issuer, thus reducing the defaultrisk relative to alternative instruments which do not have fixed realpayments and cannot, therefore, be tailored to produce a reasonable, oreven the best possible, match between promised payments and expectedfuture real revenues.

Note that the use of the U.S. government is illustrative, as the conceptapplies equally well to other governments that have the power to printmoney.

This context for the term “constant-dollar financial instrument” isapplicable herein, and private constant-dollar financial instruments maybe comprised of, utilize and/or be derived from one or more otherprivate constant-dollar financial instruments, where the term“constant-dollar financial instrument” applies to instruments whoseunits that are held constant may be any currency adjusted by any desiredprice index or other economic index.

Private constant-dollar financial instruments may or may not be“private” in the sense that the data regarding the instrument or theissuer is private. Indeed, in the case of a public issue of privateconstant-dollar financial instruments, federal and state securities lawsmandate extensive public disclosure of data regarding both thesecurities and the issuer of the securities.

Private constant-dollar financial instruments that hold purchasing powerconstant (by adjusting the nominal currency amounts by an agreed uponprice index) are distinguished from other private financial instruments(i.e., financial instruments that are not constant-dollar instruments)by their virtual elimination of inflation risk and their ability toreduce default risk. They may reduce interest rate risk because realinterest rates are less volatile than nominal interest rates.

The use of constant-dollar financial instruments (both private andissuances by national governments) may eliminate a portion of thecurrency risk in international financing by eliminating the impact ofdifferential inflation rates on changes in the exchange rate—a majorfactor in long-term exchange rate risk. The inflation-immunized exchangerates produced by the computer-aided method will enable marketparticipants to efficiently manage the remaining currency risk—includingthe ability to reduce the remaining currency risk through the use ofhedging instruments (e.g., futures contracts, forward contracts, swapscontracts and option contracts) that are created using theinflation-immunized exchange rates.

The inflation-immunized exchange rates of the present embodiments mayutilize (see FIG. 6) that the gaps between the observation times(typically one month and sometimes as much as one quarter) for eachindex be filled in so as to provide a data frequency that is consistentwith the frequency with which the spot exchange rates are observed, thuscreating “infill indices.” For inflation-immunized exchange rates thatare used to create an index that is then used as the basis for a hedginginstrument (e.g., futures contracts, forward contracts, swaps contracts,option contracts, etc.), the utilized data frequency may beapproximately continuous.

In the case of an inflation-immunized exchange rate index that is usedto define hedging instruments, the “data infill” for the price (orother) index used to adjust a currency for inflation may be based onpast observations of the price (or other) index. For example, if theindex is a monthly index (such as the CPI-U), the process of filling inthe data between the monthly observations may be carried out bydeveloping a process to predict the next monthly value for the indexgiven past monthly data. The prediction for the next monthly value maythen be used to “fill in” the index values for the times between thevalue corresponding to the latest monthly observation and the predictednext monthly value.

Any agreed-upon process may be used to predict the next monthly value. Asimple, naïve process would be to predict the next monthly value to beequal to the latest available monthly observed value. Given that pricelevels usually increase over time, this naïve process may not beoptimal. Another possible process for prediction may be to use a trendline based on the past rate of increase (e.g., the rate of increase overthe last month, over the last quarter, over the last six months, overthe last year, etc.). Still another possible process for prediction isto use a weighted average of recent monthly rates of change, possiblyestimated using past data sets. Yet another possible process forprediction is to use a time series estimation process such asBox-Jenkins, exponential smoothing or a cycles-based process.

Given the predicted next monthly value, the data between the valuecorresponding to the latest monthly observed value and the predictednext monthly value may be filled in using a linear process, anexponential process, or any other desired process. For an example of alinear process for infill, assume that CPI_(A) is the valuecorresponding to latest monthly observed value for the CPI, that CPI_(p)is the projected value for the next monthly CPI, that t_(m) is thenumber of days in the month, that t is the number of days since thelatest observed value for the CPI, and that CPI_(t) is the infill valueat time t. Then:CPI _(t) =CPI _(A) +t*(CPI _(P) −CPI _(A))/t _(m)

An example of an exponential process for infill is (using the samenotation):CPI _(t) =CPI _(A)+[(CPI _(P) /CPI _(A)){circle around ( )}(t/t_(m))−1]*CPI _(A)

Regardless of the process used for infill, t may be in fractional daysor it may be in whole days. If whole days are chosen, the infill valuemay be assumed to be unchanged throughout the day.

At the time that the next observed value of the index is received, thatactual value may or may not be used to replace the value that waspreviously predicted. If the previously predicted value is not replacedby the actual value of the index for that time period when the actualvalue becomes available, then the value corresponding to the latestobserved value will be the value that was predicted for that periodrather than the actual value of the index for that period (or, in termsof the above notation, CPI_(A) will be the value that was predicted forthat month, rather than the actual value for that month). However, theactual values of the index may be used to predict the value for thecoming month, thus minimizing the forecast error.

The infill series will fluctuate around the actual series but thedifferences will likely be minimal (likely well within the measurementerror of the actual series). In addition, choosing not to replacepredicted values with actual values will eliminate any discontinuitiesin the infill series that might result from replacement of predictedvalues by actual values without introducing a need to revise previouslyestablished infill values.

If the infill index replaces predicted values with actual values, thenfluctuations of the infill index around the actual index will beeliminated. However, this choice will introduce discontinuities into theinfill index unless the infill values are revised following theinsertion of the actual value. For purposes of determininginflation-immunized exchange rates that are used in—contracts), thesediscontinuities or revisions may be less desirable than the minorfluctuations around the actual index that are created by retaining thepredicted values in the infill index. Therefore, the users of thehedging instruments may prefer the retention of the predicted values inthe infill index. However, the system of some of the embodiments offersthem their choice of methodology for creating the infill index.

After the infill indices are determined, the system (FIG. 6) will updatethe infill indices as the underlying price indices are updated andoutput the updated infill price indices.

After the numerator currency and the base date for inflationimmunization are chosen and the spot currency exchange rates have beeninput, the system (FIG. 6) will determine the inflation-immunizedexchange rates using the specified infill indices and output theinflation-immunized exchange rates. Spot exchange rates will be inputinto the system (FIG. 6) on a real time basis and the system will: 1)determine the inflation-immunized exchange rates on a real time basis;and, 2) output the inflation-immunized exchange rates on a real timebasis. For example, suppose that the spot exchange rate is $1.60 (U.S.)for 1 British pound and that the base period for inflation-immunizationis Jan. 1, 2000. The system will use the infill index for the U.S.dollar to transform $1.60 today into Jan. 1, 2000 dollars by multiplying$1.60 by the infill index value for Jan. 1, 2000 and dividing by thecurrent value of the infill index. Say that the result is $1.45 in Jan.1, 2000 dollars. The system will use the infill index for the Britishpound to transform 1 pound today into Jan. 1, 2000 pounds by multiplying1 pound by the infill index value for Jan. 1, 2000 and dividing by thecurrent value of the infill index. Say that the result is 90 new pencein Jan. 1, 2000 pounds. The system will then divide $1.45 by 0.90 to get(and output) an inflation-immunized exchange rate of $1.61 in Jan. 1,2000 dollars for 1 Jan. 1, 2000 pound.

The result will be an inflation-immunized exchange rate index that isproduced and available on a real time basis, thus creating an index thatis a suitable basis for defining, producing and pricinginflation-immunized hedge instruments (e.g., futures contracts, forwardcontracts, swap contracts and options contracts).

The computer-assisted system of the some embodiments can include the useof the inflation-immunized exchange rate indices produced (in real time)by the system (and the associated infill price indices) in: 1) defininginflation-immunized hedge instruments (e.g., futures contracts, forwardcontracts, swap contracts and option contracts); 2) producing theinstruments; 3) trading the instruments; 4) pricing the instruments; 5)calculating margin requirements (if applicable); and, 6) settling thecontracts.

Consider the definition, creation, trading, pricing and settlement of aninflation-immunized currency futures contract using aninflation-immunized exchange rate index (and associated infill priceindices) produced in real time by the system of the some embodiments.

Suppose that the currencies are the U.S. dollar and the British pound.The underlying indices chosen are the CPI-U for the U.S. dollar (used toadjust TIPS for inflation) and the price index that is used to adjustinflation-linked gilts. It will be specified whether the contract willbe a cash settlement contract or whether delivery will be required. Foreach price index, a process is specified for creating the associatedinfill index. A source of spot exchange rate data that is available on areal-time basis is specified (including a choice of using bid or offerrates). A numerator currency is specified—assume that it is the U.S.dollar, thus making the pound the denominator currency. A base period(say Jan. 1, 2000) is chosen for inflation immunization. A contract sizeis chosen (say 10,000 Jan. 1, 2000 pounds) and contract expiration datesare selected. Contract dates may involve maturities that aresignificantly longer than the maturities of most futures contracts.Expiration dates of 10 years, 15 years—even 20 years or 30 years—wouldbe useful for hedging international investments in constant-dollarsecurities (and other investments that can be expected to produce realcash flows, such as commercial real estate and common stocks). A marginrequirement is established (say 3% of the value of the contract incurrent dollars). The value of the contract in current dollars can befound by using the infill index associated with the CPI-U to adjust theclosing price of the contract from Jan. 1, 2000 dollars to currentdollars.

The system will mark all accounts to market every trading day at theclosing price. The system will multiply the closing price in Jan. 1,2000 dollars by the current value of the infill index and divide theresult by the Jan. 1, 2000 value of the infill index and then multiplythe result by 3% to calculate the margin requirement for a contract incurrent dollars. The system will then determine (and output, ifrequired) whether or not a margin call will be made, and if so, theamount of the margin call. The system will also determine (and output,if relevant) the amount of surplus funds (if any) in the margin account.

When an open position is closed, the system will calculate the gain orloss in Jan. 1, 2000 dollars, convert the gain or loss to currentdollars using the infill index, and determine the amount of dollars thatis to be paid to (or is due from) the investor. For contracts thatremain open until their expiration date, the system will determine(using the infill indices and the closing inflation-immunized currencyindex value) the amount of the cash settlement in current dollars (forcash settlement contracts) or the number of current pounds to bedelivered for the number of current dollars (for contracts that requiredelivery).

The system may be used to define, create, trade, price and settleoptions on inflation-immunized currencies. The option contracts may bedefined in terms of the purchase of a specified amount of oneinflation-immunized currency (say, 10,000 Jan. 1, 2000 British pounds)for a strike price specified in another inflation-immunized currency(say 16,000 in Jan. 1, 2000 U.S. dollars) at a specified exercise date(say 10 years in the future) or they may be defined in terms of anoption to buy an inflation-immunized currency futures contract at astrike price specified in terms of inflation-immunized currency exchangerate with an exercise at or close to the expiration day of the futurescontract.

Similarly, the system may be used to define, create, trade, price andsettle inflation-immunized exchange-rate currency forward and swapscontracts. The markets for forward and swaps contracts are anover-the-counter dealer market with most of dealers being largecommercial banks and/or investment banks. The contracts are customizedto meet the needs of the customers and the dealers may hedge their netexposure by going long in constant-dollar instruments denominated in onecurrency while simultaneously going short constant-dollar instrumentsdenominated in the other currency. Or they may hedge their net exposureusing inflation-immunized currency futures. Regardless of their hedgingprocedure, the dealers will use the system to continuously price theirswaps, forwards and hedges so as to be able to adjust their hedgeposition in a manner that minimizes their risk.

FIG. 1 illustrates an embodiment directed to a single computer systemcomprised of a computer with control means 14, an input means such as akeyboard 12, a storage means such as a disk drive 10, and an outputmeans such as a printer 16.

FIG. 1A expands the system 1 to include the possibility of more than onecomputer. The possible computers comprising the system 1 include, butare not limited to, any computer or combination of computers including:a financial intermediary computer 100; a depository institution computer102; a commercial bank computer 104; a credit union computer 106; aninsurance company computer 108; a pension fund computer 110; a financecompany computer 112; a leasing company computer 114; an investmentcompany computer 116; a mutual fund computer 118; a real estateinvestment trust computer 120; a special purpose entity computer 122; areal estate mortgage investment conduit computer 124; a trust computer126; a limited liability company computer 128; a partnership computer130; a corporation computer 132; a servicing computer 134; a reportingcomputer 136; a broker computer 138; a trading computer 140; a clearingcomputer 142; a rating agency computer 144; an investment bankercomputer 146; a mortgage banker computer 148; a user of funds computer150; a supplier of funds computer 152; an other computer 154; and acomputer with control means 162.

As represented in FIG. 1A, each said computer can have a correspondinginput means (156) such as a keyboard, a storage means (158) such as adisk drive, and an output means (160) such as a printer, modem, etc.156, 158, and 160 can be viewed, in a sense, as plugging into any of thecomputers, as illustrated in FIG. 1A.

Any computer in the FIGS. 1 and 1A may include one or more input means(12, 156). Possible examples of said input means (12, 156) include, butare not limited to: a keyboard, a scanner, a voice recognition device, aconnection with another computer and/or other digital device, etc. Anycomputer in the FIGS. 1 and 1A may, or may not, employ any input means(12, 156), either individually or in cooperation with another computer.Data may be input into one or more of the computers of FIGS. 1 and 1Ausing one or more input means (12, 156). The input into one or more ofthe computers of the FIGS. 1 and 1A may include one or more softwareprograms, including, but not limited to: a software program stored on adisk, a software program stored on a memory card or stick, a softwareprogram stored on tape, a software program stored in a holographicstorage device, a software program stored on a computer memory device,and/or a software program stored on another computer or other digitaldevice.

Any computer in FIGS. 1 and 1A may include one or more storage means(10, 158). Possible examples of said storage means (10, 158) include,but are not limited to: a magnetic disk drive, an optical disk drive, aholographic disk drive, a tape drive, a memory card or stick, dynamicrandom access memory (dynamic RAM), static random access memory (staticRAM), and/or another computer or other such device. Any computer in theFIGS. 1 and 1A may or may not employ more than one of any such storagemeans (10, 158).

Any computer in FIGS. 1 and 1A may include one or more output means (16,160). Possible examples of said output means (16, 160) include, but arenot limited to: a monitor, a printer, a voice synthesizer, a disk drive,a holographic disk drive, and a connection with another computer and/orother device. Any computer in FIGS. 1 and 1A may, or may not, employ anyoutput means (16, 160), either individually or in cooperation withanother computer. Data may be output from one or more of the computersin FIGS. 1 and 1A using one or more output means (16, 160). The outputfrom one or more of the computers as in FIGS. 1 and 1A may include oneor more software programs, including, but not limited to: a softwareprogram stored on a disk, a software program stored on a memory card orstick, a software program stored on tape, a software program stored on aholographic disc drive, and/or a software program transmitted to anothercomputer or other device.

FIG. 1B illustrates an embodiment of a computer control means thatincludes a menu (180) and sub-menus (182, 184, 186, 188 and 190). Themain menu (180) includes the functions of pricing, servicing, riskmanagement, acquisition and selling. The sub-menu under pricing (182)includes the choices of: 1) given a real return, determining price; and,2) given a price, determining a real return. The sub-menu (184) underservicing includes the choices of: 1) monitoring; 2) managing paymentsand accounting; and, 3) managing defaults. The sub-menu (186) under riskmanagement includes the choices of: 1) assessing and managing realcurrency risk; 2) assessing and managing real interest rate risk; and,3) assessing and managing default risk. The sub-menu (188) underacquisition includes the choices of: 1) originating the instruments;and, 2) purchasing the instruments. The sub-menu (190) under sellingincludes the choices of: 1) selling through an organized exchange; 2)selling through broker/dealers; and, 3) selling through investmentbankers.

The FIGS. 2, 2A, 2B, 2C, 2D and 2E are flow charts for sampleembodiments using fixed tiers. In each case (FIG. 2) the process begins200 by specifying one or more constant dollar instruments in a fixedtier. The examples of embodiments involving the use of fixed tiersinclude: constant dollar leveraged lease funding 202; funding a constantdollar instrument by tranching cash flows 204; and securitizing a tierof constant dollar instruments contained in a fixed tier 206.

In the possible example of constant dollar leveraged lease financing,the first step is to specify the constant dollar operating leasecomprising the one tier, including, but not limited to: the asset beingleased; the lessee; the price of the asset; the (tax) depreciationschedule; the expected economic life of the asset; a real lease rate; acurrency; an index; and a frequency of adjustment 208.

The asset being leasing may be an infrastructure asset such as a gaspipeline, a power plant, a railroad line, etc. An ability of constantdollar leveraged lease financing that may be advantageous ininfrastructure finance is that the lessee can use constant dollarleveraged lease financing to unlock the value of capital-intensiveinfrastructure assets and continue to control the assets and profit fromtheir use for as long as the lessee continues to make the fixed reallease payments.

The next step is to use market data, including a real interest rate, tospecify the instruments comprising the other tier, including anonrecourse constant dollar leveraging loan or loans and an equityinvestment by a lessor 210. The nonrecourse leveraging loan or loans maybe in the same currency as the constant-dollar leveraged lease or in adifferent currency. There may be more than one nonrecourse constantdollar leveraging loan in one or more than one currency.

Then the system 1 determines whether the constant dollar lease paymentsare greater than the leveraging constant dollar loan payments 212. Ifthe answer is no, the constant-dollar lease is repriced by changing theprice of the asset and/or the real lease payments 214 and the system 1returns to step 208. If the answer is yes, the system 1 (FIG. 2A)calculates the expected real, after-tax return to the lessor 216.

Next, the system 1 determines 218 whether or not the expected realreturn to the lessor is equal to the required real return. If the answeris no, the system 1 returns to step 214, repricing the constant dollarlease.

If the answer is yes, both tiers are placed into a bankruptcy-remoteentity (a special purpose entity), the constant dollar instruments areconverted into equivalent nominal instruments, and completedocumentation of the funding is prepared by computer and outputted 220.

The final two steps are to close the funding 222 and service theinstruments comprising each tier 224.

In the example of funding a constant dollar instrument by tranching cashflows 204, the first step (FIG. 2B) is to specify the constant dollarinstrument that is to be tranched, which comprises the one tier,including the real cash flows, currency, index and frequency ofadjustment 230.

The next step is to specify constant dollar instruments comprising another tier, said constant dollar instruments having varying maturities,by associating the cash flows of the one tier with the other tier 232.

The system 1 then determines if the cash flows of the one tier are notless than the cash flows of the other tier 236. If the answer is no, thesystem 1 revises the specification of the constant dollar instrumentscomprising the other tier 238 by revisiting the step of associating thecash flows of the one tier with the other 232. If the answer is yes, thesystem 1 uses market data, including real interest rates for differentmaturities, to price each constant dollar instrument in the other tierand the constant dollar instrument comprising the one tier 240.

The system 1 then (FIG. 2C) then calculates the net total sales price ofthe constant dollar instruments that comprise the other tier and thepurchase cost of the constant dollar instrument that comprises the onetier 242.

The next step is determine if the net total sales price is greater thanthe purchase cost 244. The purchase cost may include charges for timeand resources expended by investment banker or other entity performingthe funding.

If the answer is no, the tranching is not a cost effective and thefunding does not proceed 246. If the answer is no, the system 1 proceedsto step 220.

In the example of securitizing constant dollar instruments contained ina fixed tier 206, the first step (FIG. 2D) is to specify constant dollarinstruments that are to purchased or originated and will comprise theone tier, including the type or types of instruments, maturities, creditquality, amounts, cash flows, real interest rate, etc. 260.

The system 1 then aggregates the cash flows of the constant dollarinstruments that comprise the one tier 262. The next step is to specifyhomogeneous constant dollar securities with differing claims prioritiesand maturities by splitting the aggregate cash flows of the one tier byclaims priorities and maturities, and place these constant dollarsecurities in an other tier 264.

The next step is to use market data, including real interest rates fordifferent maturities and risk classes, to price the constant dollarsecurities in the other tier and to determine the size and cash flows ofthe equity/high yield remainder piece in the other tier 266.

The system 1 then determines the expected real return and risk of theequity/high yield piece in the other tier 268. The next step is todetermine whether the return on the equity/high yield piece issatisfactory relative to risk 270. If the answer is no, then the system1 adjusts the real returns of the constant dollar instruments that areto be purchased or originated 272 and the system 1 returns to step 262.If the answer is yes, the system 1 converts the constant dollarinstruments to equivalent nominal instruments 274. If desired, the valueof the constant dollar instruments to be purchased or securitized may behedged 276.

The final steps are to purchase or originate the constant dollarinstruments to be securitized 278; place both tiers in abankruptcy-remote entity (a special purpose entity) and output completedocumentation of the funding 280; close the funding by sellingsecurities that comprise the other (funding) tier 282; and service theinstruments comprising each tier 284.

The FIGS. 3 and 3A are flow charts for a sample embodiment using ongoingtiers.

The first step (FIG. 3) is to specify a financial intermediary, such asa finance company, insurance company or depository institution that willassociate the ongoing tiers to implement the funding 300.

The next step is to jointly specify: 1) the constant dollar instrumentsthat are to be purchased and/or originated and contained in the oneongoing tier, including the types of instruments, credit quality andterms 302; and, 2) the constant dollar instrument that are to be issuedand contained in the other tier, including the type of instruments andterms 304.

Then the system 1 determines the size of the equity capital piece to becontained in the other (funding) tier 306. Next, the system 1 usesmarket data, including real interest rates, to calculate the expectedreal return on the equity capital piece 308.

The next step is to determine if the expected real return on the equitypiece is satisfactory 310. If the answer is no, modify thespecifications of the constant dollar instruments contained in any ofthe tiers 312 and proceed to step 306. If the yes, the system 1 (FIG.3A) converts the constant dollar instruments into equivalent nominalinstruments and generates complete documentation of the funding 314. Thefinancial intermediary then implements the funding by purchasing and/ororiginating the constant dollar instruments comprising the one tier andselling instruments comprising the other (funding) tier 316.

The system 1 services the instruments comprising each tier 318. Updatedmarket data, including real interest rates 320 and the system 1 proceedsto step 308 creating an ongoing cycle.

1. An apparatus including: a computer system comprising a computeroperably connected to an input device, and to an output device, thecomputer programmed to facilitate receiving information and processingthe information using at least one infill index to produce outputsignals at the output device, the output signals corresponding to aconstant dollar financial product, wherein the financial productcomprises a forward contract, a futures contract, a swap contract, or anoption contract, and wherein the infill index provides a data frequencyconsistent with frequency of observed spot exchange rates.
 2. Theapparatus of claim 1, wherein the contract comprises a currencycontract.
 3. The apparatus of claim 1, wherein said computer system iscomprised of at least two computers, cooperating to implement theconstant dollar financial product as a private constant dollar financialproduct.
 4. An apparatus including: a computer system comprising acomputer operably connected to an input device, and to an output device,the computer program-controlled by that, when operated, facilitatesreceiving information and processing the information by using an infillindex to produce output signals corresponding to a constant dollarfinancial instrument, and wherein the infill index provides a datafrequency consistent with frequency of observed spot exchange rates. 5.The apparatus of claim 4, wherein the processing includes determining,at the computer, an inflation-immunized exchange rate.
 6. The apparatusof claim 5, wherein the inflation-immunized inflation rate is output, atthe output device, in real time.
 7. The apparatus of claim 4, whereinthe constant-dollar financial product comprises a currency forwardcontract.
 8. The apparatus of claim 7, wherein the program-controlledcomputer, when operated, facilitates using the contract in managing realcurrency risk.
 9. The apparatus of claim 4, wherein the constant-dollarfinancial product comprises a currency futures contract.
 10. Theapparatus of claim 9, wherein the program-controlled computer, whenoperated, facilitates using the contract in managing real currency risk.11. The apparatus of claim 4, wherein the constant-dollar financialproduct comprises a currency swap contract.
 12. The apparatus of claim11, wherein the program-controlled computer, when operated, facilitatesusing the contract in managing real currency risk.
 13. The apparatus ofclaim 4, wherein the constant-dollar financial product comprises acurrency option contract.
 14. The apparatus of claim 13, wherein theprogram-controlled computer, when operated, facilitates using thecontract in managing real currency risk.
 15. The apparatus of any one ofclaims 8, 10, 12, or 14 wherein the managing includes associating realcurrency risk with a private constant-dollar instrument.
 16. Theapparatus of any one of claims 8, 10, 12 or 14 wherein the managingincludes associating real currency risk with multiple tiers ofconstant-dollar instruments denominated in different currencies.
 17. Theapparatus of claim 4, wherein the infill index is computed on a dailyperiodic basis.
 18. The apparatus of claim 4, wherein the infill indexis computed on a continuous basis.
 19. The apparatus of claim 4, whereinthe program-controlled computer, when operated, facilitates determiningof the infill index, and the determining comprises replacing previouslypredicted values with actual values.
 20. The apparatus of claim 4,wherein the program-controlled computer, when operated, facilitatesdetermining of the infill index, and the determining does not comprisereplacing previously predicted values with actual values.
 21. Theapparatus of claim 4, wherein the program-controlled computer, whenoperated, facilitates determining of the infill index, and thedetermining comprises predicting that a next observed value will equal alatest observed value.
 22. The apparatus of claim 4, wherein theprogram-controlled computer, when operated, facilitates determining ofthe infill index, and the determining comprises using a trend based on alatest rate of increase over a period of time.
 23. The apparatus ofclaim 4, wherein the program-controlled computer, when operated,facilitates determining of the infill index, and the determiningcomprises using a weighted average of recently observed rates of change.24. The apparatus of claim 4, wherein the program-controlled computer,when operated, facilitates determining of the infill index, and thedetermining comprises using a times series estimation.
 25. The apparatusof claim 24, wherein the time series estimation comprises a Box-Jenkinsestimation.
 26. The apparatus of claim 24, wherein the time seriesestimation is produced by using exponential smoothing.
 27. The apparatusof claim 24, wherein the time series estimation comprises a cycles-basedestimation.
 28. The apparatus of claim 4, wherein the program-controlledcomputer, when operated, facilitates pricing the constant-dollarfinancial instrument.
 29. The apparatus of claim 28, wherein the pricingcomprises calculating, at the computer, a margin requirementcorresponding to the constant dollar financial instrument.
 30. Acomputer-aided method comprising: providing a computer system comprisinga computer operably connected to an input device and to an outputdevice; and operating a computer program, at the computer, thatfacilitates: receiving, at the input device, input information;determining, by the computer from the input information, an infillindex, and wherein the infill index provides a data frequency consistentwith frequency of observed spot exchange rates; receiving, at the inputdevice, input financial product information; processing, by thecomputer, the input financial product information with the infill indexto produce data corresponding to a constant dollar financial instrument;and outputting the data at the output device.
 31. The method of claim30, wherein the step of processing at the computer, the information withan infill index to produce data corresponding to a constant dollarfinancial instrument further includes determining, at the computer, aninflation-immunized exchange rate.
 32. The method of claim 31, whereinthe inflation-immunized inflation rate is output, at the output device,in real time.
 33. The method of claim 31, wherein the constant-dollarfinancial product comprises a currency forward contract.
 34. The methodof claim 33, further including using the currency forward contract inmanaging real currency risk.
 35. The method of claim 31, wherein theconstant-dollar financial product comprises a currency futures contract.36. The method of claim 35, further including using the currency futurescontract in managing real currency risk.
 37. The method of claim 31,wherein the constant-dollar financial product comprises a currency swapcontract.
 38. The method of claim 37, further including using thecurrency swap contract in managing real currency risk.
 39. The method ofclaim 31, wherein the constant-dollar financial product comprises acurrency option contract.
 40. The method of claim 39, further includingusing the currency option contract in managing real currency risk. 41.The method of any one of claims 34, 36, 38, or 40 wherein the managingthe real currency risk includes associating real currency risk with aprivate constant-dollar instrument.
 42. The method of any one of claims34, 36, 38, or 40 wherein the managing the real currency risk includesassociating real currency risk with multiple tiers of constant-dollarinstruments denominated in different currencies.
 43. The method of claim30, wherein the infill index is computed on a periodic basis.
 44. Themethod of claim 30, wherein the infill index is computed on a continuousbasis.
 45. The method of claim 30, wherein the determining of the infillindex comprises replacing previously predicted values with actualvalues.
 46. The method of claim 30, wherein the determining of theinfill index does not comprise replacing previously predicted valueswith actual values.
 47. The method of claim 30, wherein the determiningof the infill index comprises predicting that a next observed value willequal a latest observed value.
 48. The method of claim 30, wherein thedetermining of the infill index comprises using a trend based on alatest rate of increase over a period of time.
 49. The method of claim30, wherein the determining of the infill index comprises using aweighted average of recently observed rates of change.
 50. The method ofclaim 30, wherein the determining of the infill index comprises using atimes series estimation.
 51. The method of claim 50, wherein the timesseries estimation comprises a Box-Jenkins estimation.
 52. The method ofclaim 50, wherein the time series estimation is carried out usingexponential smoothing.
 53. The method of claim 50, wherein the timeseries estimation comprises a cycles-based estimation.
 54. The method ofclaim 30, further including pricing, at the computer, theconstant-dollar financial instrument.
 55. The method of claim 54,further including calculating, at the computer, a margin requirementcorresponding to the constant dollar financial instrument.